Top cable financial analysts had high praise for top U.S. cable operator Comcast at a panel session held after Comcast reported second-quarter results Wednesday.
Comcast saw its stock price rise earlier in the day after reporting results that saw video losses trimmed and high-speed data additions accelerate. Craig Moffett, speaking at a panel session at The Independent Show in San Diego, noted the recent calls and moves to consolidate top cable companies and said “the reason they’re trying to consolidate is they want to try to be like Comcast.”
Leaving aside whether potential future synergies between NBCUniversal content outlets and Comcast’s cable business might become important, Moffett said, at Comcast “each business on its own is operating pretty well, especially the cable business."
Moffett, who is senior analyst and principal at Moffett Research, said “Comcast is executing exceptionally well. Kudos to [cable chief] Neil Smit and the team there because they’re setting a pretty high bar for everybody else.”
Deutsche Bank managing director Doug Mitchelson noted that Comcast was seeing operational gains even before new IP-video-based enchancements – the X1 and X2 platforms – are widely deployed. He also said Comcast was seeing benefits of its investments in video-on-demand rights and exploitation of VOD.
“One message from the results is video on demand works and the second is that you’ve got to get out there and execute really, really well. And if you do, it’s a great business,” Mitchelson said.
As the biggest cable operator, Comcast has the most leverage against rising programming prices, a trend that Moffett said posed "a very genuine threat to the whole ecosystem." Even so, the analysts noted Comcast said its programming costs increased 10% year over year in the second quarter. Mitchelson said Comcast has some renewals to get done with big programmers, including Disney and News Corp., over the next few years and will continue to see costs spike. But Comcast has been doing longer contracts, such as 10 years, and over time that will help keep content cost increases to mid single digits. At that point, Mitchelson said, Comcast will be in a position to consolidate other companies because of its scale advantages.
They were joined on the panel by Laura Martin, senior analyst at Needham & Co., and by a moderator, Corey McCarthy, CFO at the National Cable Television Cooperative, which organized The Independent Show in connection with the American Cable Association. The three-day conference closed today. Pictured, from left, McCarthy; Martin; Mitchelson and Moffett. Photo by Jim Ezell/EZ Event Photography.